India and Oman are set to finalize a trade agreement in the coming months, according to two Indian government officials. This move comes as India aims to bolster its relations in the Middle East amid escalating tensions that pose risks to crucial shipping routes.
One official stated to Reuters, “It will help India with a strategic partner and access to key trade routes in a volatile region.”
Despite the current annual trade between India and Oman being less than $13 billion, the partnership holds significance for India due to Oman’s position as a gateway to the vital Strait of Hormuz, a critical transit point for global oil shipments.
With recent regional conflicts, including Israel’s conflict with Hamas and Yemen’s Houthi militants’ actions in the Red Sea, India sees the trade deal as crucial for ensuring stability in the region.
The finalization of the trade agreement depends on the approval of the winning government in India’s ongoing national elections, with results expected on June 4. Prime Minister Narendra Modi is anticipated to secure a rare third term.
While both Indian and Omani authorities did not respond to email queries, the officials preferred anonymity due to the confidential nature of the discussions.
India’s focus on bilateral deals with Gulf Cooperation Council (GCC) member nations like Oman and the UAE comes after limited progress in negotiations with the GCC as a whole.
The proposed agreement with Oman also positions India advantageously amidst GCC negotiations with Pakistan and China, providing a competitive edge.
Oman has agreed to exempt duties on Indian exports valued at $3 billion annually, covering various sectors such as agriculture, gems and jewelry, automotive, medical devices, engineering, and textiles.
In return, India has agreed to reduce duties on certain Omani exports like petrochemicals, aluminum, and copper, while also imposing import caps on these goods, as stated by the officials.